AMD Announces Q4 2016 and FY 2016 Results

Today AMD announced their latest quarterly earnings. There was much speculation as to how well or how poorly the company did, especially in light of Intel’s outstanding quarter and their record year. Intel has shown that the market continues to be strong, even with the popular opinion that we are in a post-PC world. Would AMD see a strong quarter, or would Intel take further bites out of the company?

The results for AMD are somewhere in between. It was not an overly strong quarter, but it was not weak either. AMD saw strength in the GPU market with their latest RX series of GPUs for both desktop and mobile applications. Their CPU sales seemingly were flat with limited new products in their CPU/APU stack. AMD is still primarily shipping 32nm and 28nm products and will not introduce 14nm products until Ryzen in late Q1 of this year. While AMD has improved their APU offerings at both mobile and desktop TDPs, they still rely on Carrizo and the Bristol Ridge derivative to provide new growth. The company’s aging Piledriver based Vishera CPUs still comprise a significant portion of sales for the budget and midrange enthusiast markets.

The company had revenues of $1.11B US for Q4 with a $51M net loss. Q3 featured revenues of $1.31B, but had a much larger loss of $293M. The primary factor for that loss was the $340M charge for the adjusted wafer start agreement that AMD has with GLOBALFOUNDRIES. AMD did make less this past quarter, but they were able to winnow their loss down to the $51M figure.

While AMD stayed steady with the CPU/APU and GPU markets, their biggest decline came in the semi-custom products. This is understandable due to the longer lead times on these products as compared to AMD’s CPUs/APUs and GPUs. The console manufacturers purchase these designs and then pay out royalties as the chips are produced. Sony and Microsoft each had new console revisions for this holiday season that feature new SoC designs from AMD for each. To hit the holiday rush these companies made significant orders in Q2 and Q3 of this year to allow delivery in Q4. Once those deliveries are made then Sony and Microsoft dramatically cut orders to allow good sell-through in Q4 and not have massive unsold quantities in Q1 2017. With royalties down with fewer chips being delivered, AMD obviously suffers at the hand of seasonality typically one quarter sooner than Intel or NVIDIA does.

For the year AMD had nearly $300M more in revenue as compared to 2015. 2016 ended at $4.27B as compared to 2015’s $3.99B. This is generally where AMD has been for the past decade, but is lower than they have seen in years past with successful parts like Athlon and their Athlon 64 parts. In 2005 AMD had $5.8B in revenue. We see that AMD still has a way to go before matching some of their best years as a company.

One of the more interesting aspects is that even through these quarterly losses AMD has been able to increase their cash on hand. AMD was approaching some $700M a few years back and with the losses they were taking it would not be all many years before liquidity was non-existent. AMD has been able to build that up to $1.26B at the end of this quarter, giving them more of a cushion to rely upon in tight times.

AMD’s year on year improvement is tangible, but made more impressive when considering how big of an impact the $340M charge that the WSA incurred. This shows that AMD has been very serious about cutting expenses and monetizing their products to the best of their ability.

This coming year should show further improvement for AMD due to a more competitive product stack in CPUs, APUs, and GPUs. AMD announced that Ryzen will be launching sometimes this March, hitting the Q1 expectations that the company had in the second half of 2016. Previous to that AMD thought they could push out limited amounts of Ryzen chips in late Q4 2016, but that did not turn out to be the case. AMD has shown off multiple Ryzen samples running anywhere from 3.2 GHz base with a potential engineering sample with a boosted speed up to 4 GHz. Ryzen looks far more competitive against Intel’s current and upcoming products than AMD has in years.

The GPU side will also be getting a boost in the first half of 2017. It looks like the high end GPU Vega will be launching in Q2 2017. AMD has addressed the midrange and budget markets with the Polaris based chips but has been absent at the high end with 14nm chips. AMD still produces and sells Fury and Nano based offerings that somewhat address the area above the midrange, but they do not adequately compete with the NVIDIA GTX 1070 and 1080 products. Vega looks to be competitive with what NVIDIA has at the high end, and there is certainly a pent up demand for an AMD card in that market.

AMD had a solid 2016 that showed that the current management team could successfully lead the company through some very challenging times. The company continues to move forward and we shall see new products with CPUs, GPUs, and motherboards that should all materially contribute to and expand AMD’s bottom line.

Well, other than financials, I am keeping two things from this report.

We will have to wait much longer for Vega. Well, AMD fans are used to be waiting. Nvidia enthusiasts on the other hand would be extremely angry. Late Vega means late 1080Ti, means late Volta. On the other hand GTX 1070 and GTX 1080 will maintain their value for a little longer.

With 11% decline for the 1st quarter, Rysen will start at limited quantities. It will help them, but it wouldn't do any wonders.

~2-3 more months isn't that long to wait for Vega and Zen will dramatically raise AMD's CPU ASP's which will help massively even if volume is super low.

Rumors have been that Ryzen volumes are good though and the only reason they're not out yet is due to debug issues with the mobo's hence the 'hard' launch comments.

The real issue with Vega is that its still GCN (so big die and relatively power hungry) and while they'll probably finally be able to compete on the high end against the 1080 or 1080Ti for gaming nVidia can easily drop the prices on their existing products while still maintaining good profits and force AMD to drop theirs in turn killing their profits on Vega due to its production costs. Really AMD needed to have a replacement for GCN a year ago. Its just too targeted for compute work loads and not enough for gaming.

If they'd been able to make big compute oriented HPC sales like nVidia has then maybe it would've made sense but they were never going to pull that off as long as the software wasn't there. They've made some recent inroads into fixing the software issue but its still not really enough unfortunately to make the sales happen like they need to.

Navi can't come soon enough and it'll have to be a homerun to keep AMD's GPU's relevant.

Once?
It was supposed to come out in middle 2016, then gone to end of 2016. Then it was "only OEMs" for the end of 2016, then it was CES, then January in general and now is rumored for the end of Fabruary.
Considering that AMD was saying that Zen(Ryzen) will be a product for the full fiscal 2017 year, this can go even much latter than February or March, like "We started selling to OEMs, one weak before the end of the fiscal 2017 1Q". Anyway, let's hope that those rumors talking about review samples, in 2-3 weeks, end up true.

will be interesting to see what mobility polaris sales are like. So far, only apple are using them AFAIK, but would be intersting, esp. for devices that would have put a 940MX type chip in before, 1050 and 1050Ti are either too power hungry or too epxensive for those price points.

Sure the seasonal market variability hurts AMD more in the consumer part of the CPU/GPU market place but AMD is now getting some business in the HPC/server/Workstation GPU side of the market that is not as dependent on seasonal consumer sales. AMD’s consumer Ryzen 8 core SKU(2 CCX units, a CCX unit is made up of 4 full Zen cores sharing only L3 cache) is basically made up of the same CCX units as a Zen server core variant(Up to 8 CCX units). So look for AMD to begin to get back in that professional market for HPC/server/Workstation CPUs(2H of 2017) and Radeon Pro WX series GPUs(Current and Vega 2H of 2017) SKUs. AMD with its 32 core Zen/Naples will get back that into that professional revenue producing market that Intel has such a large percentage of market share currently.

So even a small percentage of that CPU professional SKU market amount is going to be enough to return a very lean AMD to profitability and that does not even include the Professional Vega based GPU accelerators that AMD can package price with its Zen/Naples 32 core CPUs and get AMD some more business. Intel has no GPU accelerator IP to match AMD’s Zen/Vega/Other GPU professional offerings and Nvidia has no x86 license to be able to offer any CPU/GPU package deals as low as AMD will be able to price for any of its CPU/GPU professional SKUs as a package deal to sale more GPUs along with Zen/Naples CPUs with some very attractive HPC/server/Workstation package pricing deals.

This time around AMD’s Ryzen/Vega will get AMD some better than cyclical consumer business sales with Zen/Naples and Polaris/Vega getting AMD back into the HPC/server/Workstation CPU market in which to add to its Polaris/Vega professional market share. It’s going to take a few more business quarters for AMD’s revenue figures to show up so there will have to be some form of survey results among the users of HPC/server/Workstation SKUs to see if AMD is getting any sales in that market, before AMD’s required quarterly figures are out that reflect the 2H of 2017’s actual figures. AMD’s current HPC/server/Workstation market share is so low that AMD can only go up from this point on with its Zen/Naples offerings.

So every percentage point of that HPC/server/Workstation market gained will represent mostly new market types of revenues for AMD as AMD has not been present as a significant market player in the HPC/server/Workstation for quite a while with is CPU SKUs. AMD is also targeting and getting more GPU accelerator business with its Radeon Pro WX line of GPU accelerators and its new Radeon Instinct line of of GPUs targeting the AI/machine learning market.